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Selecting the type of business franchise to invest in is something you should do methodically. Some questions to consider are:
• What experiences do you have in the industry?
• What's the demand for the product?
• What competition exists?
• Why is this franchise a good choice?
You should understand the business lifecycles. Investigate any seasonality involved in the business and have plans for alternate sources of income or a means to survive through the slow time.
A large part of what you are purchasing is the name recognition of the business franchise. Make sure you do some research into franchise information, including how long they've been in business, what kind of reputation they have amongst your prospective customers, and whether any complaints have been filed against them.
Franchise information regarding costs should generally include the initial franchise fee, royalty payments, and advertising fees. In addition, the franchise agreement may specify site appearance and location approval, any restrictions on goods for sale, and restrictions on methods of operation for the franchise business.
Franchise information should indicate the length of the agreement (typically 15-20 years). Note that, at the time of renewal, the original terms of the franchise agreement may be changed such that royalty rates are increased and geographical area is more restricted (among other things).
*Purchasing a franchise helps you start a new business with some distinct advantages.
Your prospective customers have probably already heard the brand name or store name of the franchise so you gain instant market recognition. You get the benefit of other franchise's good customer service in other areas as well as the advertising benefits of purchasing as a group. In addition, franchise information gives you marketing tips, general business guidelines, and coaching to help you get started. Training and ongoing support while growing your new franchise business can be invaluable. Purchasing a franchise business is not a guarantee of success, although the risk of failure is reduced by buying a franchise. You'll need to work hard to be successful but, as you can see, franchises offer extra help and incentive.
When evaluating a franchise business, investigate the franchise's experience. Just because someone has grown a successful business does not automatically mean they can successfully turn into a franchise business.
Find out how long a business has been offering franchises and get some hard facts and figures about those franchises. Managing a chain of franchises requires a distinct set of skills. Investigate their experience and success rate. Ask the hard questions before you make any decisions. Investigate any and all available franchise information is a good business decision.
Franchises typically provide the business expertise and the use of a trademarked symbol or name in exchange for a percentage of income generated. For the inexperienced person who wants to start a new business, franchises can ease the risk of starting a new business from scratch. A business franchise can also be set up where the franchisee is merely purchasing the right to use a trademarked symbol or brand, without including any marketing or business guidance.
Prices and particulars regarding each franchise business can vary tremendously whether it is within the same industry or not. Research franchise information carefully to discover the norms for franchises in the areas of your interest so you understand the costs and the support you'll receive.